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| The Federal Trade Commission outlined its oversight of mortgage companies for a civil rights watchdog group today. Among recent investigations of mortgage companies was one involving a wholesale lender that allegedly turned a blind eye when its mortgage brokers charged white borrowers less than some minorities.Speaking before the U.S. Commission on Civil Rights, Eileen Harrington, director of the FTC’s Bureau of Consumer Protection, said the agency has brought 26 law enforcement actions against mostly subprime mortgage lenders during the past decade, according to an FTC statement Friday. Those cases resulted in more than $340 million in payments back to borrowers.
She said that the FTC focused on the most egregious illegal lending practices of nonbank lenders. Deceptive advertising is at the heart of the practices it investigates. Harrington presented a statement to the lawmakers indicating that the FTC intends to continue identifying, prosecuting and preventing illegal mortgage practices — especially predatory lending practices that target minorities. She noted that while the FTC has the authority to regulate mortgage brokers, finance companies and other non-bank lenders — it has no authority over financial institutions. The statement to Congress covered many of the same cases that the FTC has been touting for years as well as a more recent discrimination settlement with Gateway Funding Diversified Mortgage Services L.P. Another case involved allegations that mortgage broker customers of Homecomings Financial LLC, which is a subsidiary of Residential Capital LLC, charged blacks and Hispanics more than similarly situated whites. But the FTC dropped that case after Homecomings went out of business in September 2008. “These disparities were caused by Homecomings’ policy and practice of allowing its brokers broad discretion in determining the amount of discretionary fees charged to borrowers,” the FTC said. |
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